TYPES OF INVESTMENT
There are various types of ivestments as tools that can help you achieve one’s financial goals —
from bank products to stocks and bonds – each has its own set of features, risk factors and ways investors can use them . They are:
Stocks(also known as shares or equities) is the most common and simple type of investment. When one buys stock, one is buying an ownership stake in a publicly traded company.
When one buy a stock , one hopes that the price will go up so one can then sell it for a profit. The risk is that the price of the stock could go down , in which one’d lose money .
They are financial instruments where one can invest a lump sum amount and earn guaranteed returns. Here, a investment can be locked in for a specified period , during which ones interest gets accumulated. Good thing is the interest is pre-decided and is unaffected by market forces so one can get guaranteed returns.
They are a fixed income instrument that refers to a loan made by an investor to an entity ( typically corporate or governmental). In simple words, a bond can be seen as an I.O.U. between the investor and the entity that includes the details of the loan and its payments.
A mutual funds refers to a type of financial vehicle which is made up of a pool of money collected from many investors to invest in number of companies securities,such as stocks, bonds, money market instruments, and other assets. They carry many of the risks same as stocks and bonds does, basically depending on what they are invested in.
An ETF also known as exchange traded fund that trades on an exchange just like stocks does.The share price of an ETF will change throughout the trading day as the shares are purchased and sold in the market. Additionally, ETF contain all types of investments such as stocks, commodities, or bonds.
CERTIFICATES OF DEPOSIT
A certificate of deposit (CD) is considered as a very low-risk investment. In this, one gives a bank a certain amount of money for a predetermined amount of time. When that time period is over, one gets one’s principal back along with a predetermined amount of interest. The longer the loan period , the higher ones interest rate is.
Retirement plans aren’t a separate category of investment, but more like a vehicle to buy stocks, bonds and funds. The first,let’s one invest pretax details (as with a tradition IRA). The second allows one to withdraw money without paying taxes on that money. In this type of investment, investments risks are the same as buying the investments outside of a retirement plan.
An ‘option’ is considered a somewhat more complicated way to buy a stock. When one buys an option, one is purchasing the ability to buy or sell an asset at a certain price at a given time. There are two types of options,they are – call options and put options. The former is for buying assets while the latter is for selling options.
Crypto currencies are a fairly new investment option. Bitcoin is the most famous crypto currency,but there are many others types of crypto currency like Litecoin and Ethereum. Crypto currencies are digital currencies that doesn’t have any government backing, instead it is based on block chain technology. One can buy and sell them on crypto currency exchange platform.